The U.S. economy last year continued to recover from the worst economic crisis in more than 70 years, according to an annual White House report to Congress.
Though the economy still faces obstacles of high unemployment and uneven global growth, the report said the current recovery is expected to continue and gain stronger footing after the loss of millions of jobs during the recession.
“The economy has shifted out of rescue mode into the growth phase where we’re trying to get the growth-rate up and hiring-rate up,” Austan Goolsbee, the chairman of the White House Council of Economic Advisers, said in a conference call with reporters yesterday.
Although the economy still faces “multiple pressures,” including continued weakness in the housing market and depleted state and local government budgets, it has been able to overcome these obstacles and expand, the report said.
“The economy must show faster growth, but certainly this is movement in the right direction,” according to the report.
While the Standard & Poor’s 500 Index has risen more than 60 percent since Obama took office, growth in the world’s largest economy will need to accelerate to make up for the almost 9 million jobs lost during the recession. The unemployment rate fell to 9 percent in January from 9.4 percent in December. Still, it has been at 9 percent or higher since May 2009, the longest period of elevated joblessness since monthly records began in 1948.
Tax policy, credit policy and public investments will contribute to a turnaround, the report said, including the $858 billion tax-cut extension enacted in December, the report said.
A major element of administration plans to ensure faster growth is Obama’s goal of doubling exports from $1.57 trillion in 2009 to $3.14 trillion a year by the end of 2014, the report said.
In the first three quarter of 2010, the report said, exports surged by 17 percent compared with the same year-ago period, representing “a significant step toward that goal,” according to the report.
The U.S. expects growth in emerging markets will help the U.S. reach its export target. Trade globally has recovered more quickly than GDP growth, according to the report, which is sent annually to Congress.
The global economy must “shift away from its pre-crisis pattern of growth that was too dependent on U.S. consumption,” the report says. While imbalances have “narrowed significantly,” the challenge is to avoid a return to old patterns of demand, it said.
The report said that while average growth emerging from the recession worldwide has been rapid, it’s been unevenly distributed. Many nations face combinations of slow growth, debt, inflation or increased capital flows.
World GDP ‘remains considerably below the output trend it was on before the crisis struck,” it said.
Goolsbee said the greatest threats to the U.S. recovery would come from abroad, either economic instability in Europe or ripple effects from the popular uprisings in Arab countries that could lead to higher fuel prices.
The annual report reinforced the themes that Obama has emphasized: focusing on innovation, education and research to bring down the unemployment rate. The report also puts a fresh emphasis on federal policies affecting small businesses, which create about 2 of every 3 jobs since 1993.
Since taking office, Obama has signed into law 17 tax cuts targeted to small businesses, the report said. The focus this year is a “Startup America” program aimed at targeting federal help to software, semiconductor, life-science and energy companies.
“The primary goal is to increase the number of high-growth startups that create broad-based economic growth and jobs,” according to the report, by focusing on access to capital, entrepreneurship education and mentoring, commercialization of university and federal laboratory research, and reductions of barriers to growth for new ventures.
The report maintains an outlook reflected in the economic assumptions contained in the fiscal 2012 budget released on Feb. 14. The administration forecasts economic growth this year of 3.1 percent, as measured from fourth quarter to fourth quarter. It projects growth rising to an average rate of 4.1 percent during the next four years.
Outside economists project the economy to grow 3.2 percent in 2011, the most in seven years, according to the median forecast of 61 economists surveyed by Bloomberg from Feb. 2 to Feb. 8.
Obama also said as part of the budget that the unemployment rate would average 9.3 percent this year, an assessment completed in November.
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